A.2. Direct Lobbying

(1) Direct lobbying involves the attempts to influence legislation through

communications with members or employees of a legislative body or other government officials or employees who may participate in the formulation of legislation, but only if the principal purpose of the communication is to influence legislation. These communications include attempts to influence the legislative process through the discussion with or presentation of materials to members of a legislative body. See Treas. Regs. 53.4945-2(a)(1) and 56.4911-2(b)(1).

(2) A communication is a direct lobbying communication if it:

a. Refers to specific legislation; and

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b. Reflects a view on the legislation. See Treas. Regs. 53.4945-2(a)(1) and

56.4911-2(b)(1)(ii).

Example: A private foundation that communicates its support for or opposition to a specific legislative proposal through an oral or written statement presented to a member of a legislative body is attempting to influence legislation within the meaning of Sections 4945(d)(1) and 4945(e)(2).

(3) As with grassroots lobbying, a private foundation’s communication with a member

of a legislative body need not expressly support or oppose the legislative proposal under consideration for Sections 4945(d)(1) and 4945(e)(2) to apply.

Example: The presentation of a partisan analysis of a proposed bill to a member of the legislature may constitute an attempt to influence legislation.

(4) Direct lobbying activities are not limited to communications or conversations with

the members of a legislative body. Lobbying communications directed toward other governmental officials who participate in the formulation of legislation may be classified as direct lobbying but only if the principal purpose of the communication is to influence legislation. See Treas. Reg. 56.4911-2(b)(1)(i)(B).

(5) Lobbying communications to the voting public with respect to a ballot initiative or

similar procedure constitute direct (not grassroots) lobbying communications. See Treas. Reg. 56.4911-2(b)(1)(iii). Such was the case in Parks v. Commissioner, 145 T.C. 278 (2015), aff'd sub nom., Parks Foundation v. Commissioner, 717 F. App’x 712 (9th Cir. 2017), which provides a good analysis of lobbying and identifying what is a “lobbying communication.” In this case, a private foundation provided funding for radio advertisements regarding a ballot measure in Oregon. Upon completing the examination, the agent advised the foundation the expenditures were taxable. The foundation argued that, except for the two radio messages that specifically referred to a ballot measure by name, the radio messages were not direct lobbying communications because they did not "refer to" the ballot measures by mentioning any ballot measure by name. The IRS argued that a communication can "refer to" a ballot measure without identifying it by name. The court agreed with the IRS.

(6) The pertinent regulations examples address grass roots lobbying but are equally

applicable in the case of direct lobbying. Treas. Reg. 56.4911-2(b)(4)(ii)(B), Example (1) provides that a pamphlet distributed by organization Y states that the "President's plan for a drug-free America," which will establish a drug control program, should be passed. The pamphlet encourages readers to "write or call your senators and representatives and tell them to vote for the President's plan." No legislative proposal formally bears the name "President's plan for a drug-free America," but that and similar terms have been widely used in connection with specific legislation pending in Congress that was initially proposed by the President. Thus, the pamphlet refers to specific legislation, reflects a view on the legislation, and encourages readers to act with respect to the legislation. The pamphlet is a grass roots lobbying communication.

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(7) By contrast, Treas. Reg. 56.4911-2(b)(4)(ii)(A), Example (4) indicates a pamphlet

distributed by organization Z discusses the dangers of drugs and encourages the public to send their legislators a coupon, printed with the statement "I support a drug-free America." The term "drug-free America" is not widely identified with any of the many specific pending legislative proposals regarding drug issues. The pamphlet does not refer to any of the numerous pending legislative proposals, nor does the organization support or oppose a specific legislative proposal. The pamphlet is not a grass roots lobbying communication.

(8) Finally, Treas. Reg. 56.4911-2(d)(1)(iii), Example (1) provides that a non membership organization includes in its newsletter an article about problems with the use of pesticide X that states in part: "Legislation that is pending in Congress would prohibit the use of this very dangerous pesticide. Fortunately, the legislation will probably be passed. Write your congressional representatives about this important issue." This is a grass roots lobbying communication that refers to and reflects a view on specific legislation and that encourages recipients to act with respect to that legislation.

(9) On the basis of the principles illustrated in the regulatory examples, the Tax Court

held that a communication "refers to" a ballot measure within the meaning of the regulations if it either refers to the measure by name or, without naming it, employs terms widely used in connection with the measure or describes the content or effect of the measure. Parks v. Commissioner, 145 T.C. 278 (2015), aff'd sub nom., Parks Foundation v. Commissioner, 717 F. App’x 712 (9th Cir. 2017).